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Corporate Funding Pages: Loans: External Commercial Borrowings General Pages: “India
Corporate Finance” – Blog “The week that was” -
Blog |
Foreign Currency Packing Credit |
CFO Services |
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What is a Packing
Credit? Packing Credit is a pre-shipment credit facility for
funding exports. What is a foreign
currency packing credit? A PCFC is pre-shipment packing credit denominated in
foreign currency. The principal as well
as interest need to be serviced in foreign currency. Why a PCFC? Interest rates of Indian rupee denominated packing credit
enjoy subsidized rates of interest, still the rates are higher compared to foreign
currency denominated packing credit (typically 4-5% p.a.). What is the rate of
interest? PCFCs are priced by adding a spread to the London inter
bank offer rate (LIBOR). The spread added by the
lending banks is usually 2.5-4%, depending on market conditions, financial strength
of the borrower, etc. LIBOR itself keeps
fluctuating depending on market conditions, but in the present conditions (August
2012) it is less than 1%. Therefore, today a
foreign currency packing credit can be obtained any where between 3.5 to
4.75%, per annum. Call us! We will be glad to meet you, explain all
the intricacies involved. Ace has been
serving exporters and businesses for over a decade. |
Assist writing your
business plan and presentations for investors, CMA data/ project report for
banks/ Financial Institutions (FIs).
Small and
start-up companies do not have in-house financial expertise to periodically
check their financial health… |
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